/NOT FOR DISTRIBUTION TO
All amounts in this press release are in thousands of
"Following the successful completion of the Offering, the Fund reported strong operating results for its first quarter with occupancy at 95.6% and strong rental growth leading to in-place rents at the end of 2021 being approximately 1.9% ahead of forecast," commented
YTD-2021 HIGHLIGHTS
- The Fund completed the Offering and raised gross subscription proceeds of
$249,568 . - On closing of the Offering, the proceeds were used to acquire Bainbridge Sunlake ("Sunlake") and
Indigo Apartments ("Indigo"), which included a total of 757 multi-family suites inTampa, Florida andRaleigh, North Carolina , respectively, as well as 28 single-family rental homes inAtlanta, Georgia . - Subsequent to the Offering, the Fund acquired
Lyric Apartments ("Lyric") and Emerson atBuda ("Emerson") onNovember 16, 2021 andDecember 21, 2021 , respectively, adding 680 multi-family suites inLas Vegas, Nevada andAustin, Texas as well as an additional 21 single-family rental homes inAtlanta, Georgia . - As at
December 31, 2021 , the Fund had cash on hand of$10,407 and an additional$25,403 of liquidity available, including$5,330 to draw from the capital lines associated with the loans payable at the Fund's properties to fund future eligible capital expenditures and$20,073 of available credit on a credit facility ("SFR Credit Facility") available to fund the acquisition of single-family rental homes. - The Fund acquired Emerson in
December 2021 using a portion of the cash remaining from the Offering. The Fund has commenced the process of entering into debt financing for Emerson which is expected to close in the quarter endedMarch 31, 2022 . The loan proceeds, in addition to the available liquidity outlined above, is expected to be used for potential future property acquisitions which the Fund is actively pursuing. - YTD-2021 total portfolio revenue and net operating income ("NOI") were
$2,692 and$1,971 , respectively, representing a 70.3% and 75.6% increase relative to the financial forecast included in the Fund's prospectus datedOctober 28, 2021 ("Forecast") primarily as a result of Lyric, Emerson, and the single-family rental homes not being included in the Forecast ("Non-Forecast Properties "). For Indigo and Sunlake ("Forecast Properties "), YTD-2021 revenue and NOI were$1,648 and$1,203 , ahead of Forecast by 4.2% and 7.1%, respectively. - As at
January 30, 2022 , the Fund had collected approximately 97.8% of rents for YTD-2021, with further amounts expected to be collected in future periods, demonstrating the Fund's strong operating performance. - The adjusted funds from operations ("AFFO") payout ratio for YTD-2021 was 121.3% (Forecast - 83.2%), with the increase over the Forecast primarily as a result of higher than forecasted distributions partially offset by higher than forecasted AFFO. The Fund elected to pay the targeted 4.0% annualized distribution on the total proceeds from the Offering during YTD-2021 even though 100% of the Offering proceeds were not fully deployed. Assuming the Fund had paid distributions based on the actual equity deployed during YTD-2021 and adjusting annual general and administrative costs to be calculated on a pro rata basis for the Initial Reporting Period, the normalized AFFO payout ratio, as calculated below, would have been 77.3%, below the forecasted AFFO payout ratio of 83.2%.
- On
December 16, 2021 , the Fund entered into a twelve-month variable rate collar contract which allows the Fund to establish a guaranteed monthly exchange rate betweenC$1.2575 andC$1.3200 for the conversion ofU.S. dollar funds to Canadian dollar funds. The contract was entered into to protect against the potential impact of any weakening of theU.S. dollar on a portion of the amount required to pay the Fund's monthly Canadian dollar distributions and ensure a more favorable exchange rate for conversion of these funds when compared to the rate used to convert the proceeds from the Offering intoU.S. dollars ofC$1.2502 .
COVID-19 IMPACT
On
COVID-19 vaccination programs continue across the
Further disclosure surrounding the impact of COVID-19 are included in the Fund Management's Discussion and Analysis ("MD&A") in the "COVID-19" and "Future Outlook" sections for YTD-2021 under the Fund's profile, which is available on www.sedar.com.
FINANCIAL CONDITION AND OPERATING RESULTS
Highlights of the financial and operating performance of the Fund as at
As at | ||||||||
Key Multi-Family Operational Information(1) | ||||||||
Number of multi-family properties owned(1) | 4 | |||||||
Total multi-family suites | 1,437 | |||||||
Economic occupancy | 95.6% | |||||||
AMR (in actual dollars) | $ | 1,412 | ||||||
AMR per square foot (in actual dollars) | $ | 1.49 | ||||||
Number of | 49 | |||||||
Single-Family | Multi-Family | Total | ||||||
Selected Financial Information as at | ||||||||
Gross book value | $ | 12,534 | $ | 437,005 | $ | 449,539 | ||
Indebtedness | $ | 4,927 | $ | 216,719 | $ | 221,646 | ||
Indebtedness to gross book value | 39.3% | 49.6% | 49.3% | |||||
Weighted average interest rate - as at period end (2) | 2.85% | 1.95% | 1.97% | |||||
Weighted average loan term to maturity | 0.82 years | 2.88 years | 2.84 years | |||||
YTD-2021 (5) | Forecast (5) | |||||||
Summarized Income Statement | ||||||||
Revenue from property operations | $ | 2,692 | $ | 1,581 | ||||
Property operating costs | $ | (561) | $ | (367) | ||||
Property taxes (4) | $ | (161) | $ | (91) | ||||
Adjusted Income from operations / NOI | $ | 1,970 | $ | 1,123 | ||||
Fund and trust expenses | $ | (378) | $ | (139) | ||||
Finance costs | $ | (750) | $ | (385) | ||||
Distributions to unitholders of the Fund ("Unitholders") | $ | (1,224) | $ | (507) | ||||
Unrealized foreign exchange gain | $ | (45) | $ | - | ||||
Income taxes: - current | $ | (82) | $ | - | ||||
Income taxes:- deferred | $ | (476) | $ | (186) | ||||
Net loss and comprehensive loss | $ | (985) | $ | (94) | ||||
Other Selected Financial Information | ||||||||
Funds from operations ("FFO") | $ | 808 | $ | 599 | ||||
FFO per Unit - basic and diluted | $ | 0.03 | $ | 0.05 | ||||
AFFO | $ | 1,009 | $ | 610 | ||||
AFFO per Unit - basic and diluted | $ | 0.03 | $ | 0.05 | ||||
Weighted average interest rate - average during period (5) | 1.96% | 2.12% | ||||||
Interest coverage ratio | 2.64 x | 2.86 x | ||||||
Indebtedness coverage ratio | 2.64 x | 2.86 x | ||||||
Distributions to Unitholders | $ | 1,224 | $ | 507 | ||||
FFO payout ratio | 151.5% | 84.8% | ||||||
AFFO payout ratio | 121.3% | 83.2% | ||||||
Normalized FFO payout ratio (6) | 93.0% | 84.8% | ||||||
Normalized AFFO payout ratio (6) | 77.3% | 83.2% | ||||||
Weighted Average Units Outstanding (000s) - basic/diluted | 31,820 | 12,520 |
(1) | The Fund commenced operations following the acquisition of Sunlake, Indigo, and 28 single-family homes on | ||||
(2) | The weighted average interest rate on loans payable is presented as at | ||||
(3) | Property taxes were adjusted to exclude the International Financial Reporting Interpretations Committee interpretations 21, Levies ("IFRIC 21") fair value adjustment and treat property taxes as an expense that is amortized during the fiscal year for the purpose of calculating NOI. These amounts have been reported under Fair value adjustment IFRIC 21 under the Fund's consolidated financial statements for the period from | ||||
(4) | The weighted average interest rate on loans payable reflects the average prevailing index rate applicable to each of the loans payable throughout each period presented. | ||||
(5) | Figures represent the actual results of the Initial Reporting Period (YTD-2021) with YTD-2021 Forecast representing the Forecast adjusted for the Initial Reporting Period. | ||||
(6) | A reconciliation of normalized FFO and AFFO payout ratios are presented below. |
CASH PROVIDED BY OPERATING ACTIVITIES RECONCILIATION TO AFFO
The Fund was formed as a "closed-end" fund with an initial term of three years, a targeted yield of 4.0% and a targeted minimum 11% pre-tax investor internal rate of return across all classes of units ("Units") of the Fund.
AFFO and AFFO per unit for YTD-2021 were
SUBSEQUENT EVENTS
Subsequent to
Subsequent to
NON-IFRS FINANCIAL MEASURES AND RECONCILIATIONS
The Fund's consolidated financial statements are prepared in accordance with International Financial Reporting Standards ("IFRS"). Certain terms that may be used in this press release including AFFO, AFFO payout ratio, AMR, economic occupancy, FFO, FFO payout ratio, gross book value, indebtedness, indebtedness coverage ratio, indebtedness to gross book value, interest coverage ratio and NOI (collectively, the "Non-IFRS Measures") as well as other measures discussed elsewhere in this press release, do not have a standardized definition prescribed by IFRS and are, therefore, unlikely to be comparable to similar measures presented by other reporting issuers. Gross book value is defined as the fair market value of the investment properties as determined in accordance with IFRS. Indebtedness is defined as the principal amount of loans payable outstanding as at a specific reporting date. AFFO payout ratio is calculated by taking distributions declared and dividing by AFFO in a given reporting period. FFO payout ratio is calculated by taking distributions declared and dividing by FFO in a given reporting period. The Fund uses these measures to better assess the Fund's underlying performance and financial position and provides these additional measures so that investors may do the same. Further details on Non-IFRS Measures are set out in the Fund's MD&A in the "Non-IFRS Financial Measures" section for YTD-2021 and are available on the Fund's profile on SEDAR at www.sedar.com.
A reconciliation of the Fund's interest coverage ratio and indebtedness coverage ratio are provided below:
Interest and indebtedness coverage ratios | YTD-2021 (1) | Forecast (1) | |||
Net loss and comprehensive loss | $ | (985) | $ | (94) | |
Add: non-cash or one-time items and distributions (2) | $ | 1,924 | $ | 734 | |
Adjusted net income and comprehensive income | $ | 939 | $ | 640 | |
Interest coverage ratio (3) | 2.64x | 2.86x | |||
Indebtedness coverage ratio (4) | 2.64x | 2.86x | |||
(1) | Figures represent the actual results of the Initial Reporting Period (YTD-2021) with YTD-2021 Forecast representing the Forecast adjusted for the Initial Reporting Period. | ||||
(2) | Non-cash or one-time items consist of deferred taxes, amortization of financing costs and loan premiums, fair value adjustments on derivative instruments, and unrealized foreign exchange losses. | ||||
(3) | Interest coverage ratio is calculated as adjusted net income and comprehensive income plus interest expense divided by interest expense. | ||||
(4) | Indebtedness coverage ratio is calculated as adjusted net income and comprehensive income plus interest expense divided by interest expense and mandatory principal payments on the Fund's loans payable. |
A reconciliation of the Fund's cash provided by operating activities determined in accordance with IFRS to FFO and AFFO for YTD-2021 is provided below:
YTD-2021 | ||
Cash provided by operating activities | $ 1,901 | |
Less: interest costs | (750) | |
Cash provided by operating activities - including interest costs | $ 1,151 | |
Add / (Deduct): | ||
Change in non-cash operating working capital | (1,395) | |
Change in restricted cash | (220) | |
Distributions to Unitholders | 1,224 | |
Fair value adjustment on derivative financial instruments | 48 | |
FFO | $ 808 | |
Add / (Deduct): | ||
Amortization of financing costs | 130 | |
Vacancy costs associated with the home upgrade program | 119 | |
Sustaining capital expenditures and suite or home renovation reserves | (48) | |
AFFO | $ 1,009 |
A reconciliation of the Fund's normalized FFO payout ratio and normalized AFFO payout ratio are provided below:
Adjusted distributions | YTD-2021 (1) | ||||
Cash paid for acquisitions of Indigo, Sunlake, Lyric, Emerson and the single-family rental homes | |||||
and costs of the Offering (2) | $ | 242,214 | |||
Weighted average equity deployed (3) | 23,086 | ||||
Adjusted distributions on weighted average equity deployed (4) | 923 | ||||
Normalized FFO and AFFO payout ratios | YTD-2021 (1) | Forecast (1) | |||
FFO | $ | 808 | $ | 599 | |
Add: | |||||
Adjustment for pro-rated general and administrative costs (5) | $ | 185 | $ | - | |
Normalized FFO (6) | $ | 993 | $ | 599 | |
Normalized FFO payout ratio (7) | 93.0% | 84.8% | |||
AFFO | $ | 1,009 | $ | 610 | |
Add: | |||||
Adjustment for pro-rated general and administrative costs (5) | $ | 185 | $ | - | |
Normalized AFFO (6) | $ | 1,194 | $ | 610 | |
Normalized AFFO payout ratio (7) | 77.3% | 83.2% | |||
(1) | Figures represent the actual results of the Initial Reporting Period (YTD-2021) with YTD-2021 Forecast representing the Forecast adjusted for the Initial Reporting Period. | ||||
(2) | This figure represents the cash paid for acquisitions of Indigo, Sunlake, Lyric and Emerson (collectively, the " | ||||
(3) | The acquisition date of each individual property acquired by the Fund in YTD-2021 varied and, as a result, the weighted average equity deployed is calculated assuming the equity used (cash paid) in each acquisition was deployed on the date of such acquisition. The cash paid for the acquisition of | ||||
(4) | The Fund elected to pay the 4.0% annualized targeted distribution on the gross subscription proceeds from the Offering during YTD-2021 even though 100% of the Offering proceeds have not yet been fully deployed. Adjusted distributions on weighted average equity deployed is calculated as 4.0% of the weighted average equity deployed, as described above, during YTD-2021. | ||||
(5) | The general and administrative costs incurred by the | ||||
(6) | Normalized FFO and normalized AFFO are calculated as FFO and AFFO adjusted for a pro-rated amount of general and administrative costs. | ||||
(7) | Normalized FFO payout ratio and normalized AFFO payout ratio are calculated as adjusted distributions on weighted average equity deployed divided by normalized FFO and normalized AFFO, respectively. | ||||
FORWARD-LOOKING STATEMENTS
Certain statements contained in this press release constitute forward-looking information within the meaning of Canadian securities laws and which reflect the Fund's current expectations regarding future events, including the overall financial performance of the Fund and its properties, including the impact of COVID-19 and its variants on the business and operations of the Fund.
Forward-looking information is provided for the purposes of assisting the reader in understanding the Fund's financial performance, financial position and cash flows as at and for the periods ended on certain dates and to present information about management's current expectations and plans relating to the future and readers are cautioned that such statements may not be appropriate for other purposes. Forward-looking information may relate to future results, the impact of COVID-19 on the Fund's portfolio as well as the impact of COVID-19 on the markets in which the Fund operates and the trading price of the Fund's
Forward-looking statements involve known and unknown risks and uncertainties, which may be general or specific and which give rise to the possibility that expectations, forecasts, predictions, projections or conclusions will not prove to be accurate, that assumptions may not be correct and that objectives, strategic goals and priorities will not be achieved. Those risks and uncertainties include: the impact of COVID-19 and variants thereof on the Fund's portfolio as well as the impact of COVID-19 on the markets in which the Fund operates and the trading price of the Units; changes in government legislation or tax laws which would impact any potential income taxes or other taxes rendered or payable with respect to the Fund's properties or the Fund's legal entities; the applicability of any government regulation concerning the Fund's tenants or rents as a result of COVID-19 or otherwise; the realization of property value appreciation and timing thereof, and the availability of residential properties for acquisition; the availability of debt financing; and the price at which such properties may be acquired. A variety of factors, many of which are beyond the Fund's control, affect the operations, performance and results of the Fund and its business, and could cause actual results to differ materially from current expectations of estimated or anticipated events or results.
Information contained in forward-looking information is based upon certain material assumptions that were applied in drawing a conclusion or making a forecast or projection, including management's perceptions of historical trends, current conditions and expected future developments, as well as other considerations that are believed to be appropriate in the circumstances, including the following: the ability to deploy the remaining proceeds from the Offering; the impact of COVID-19 and variants thereof on the Fund's portfolio as well as the impact of COVID-19 on the markets in which the Fund operates; the applicability of any government regulation concerning the Fund's tenants or rents as a result of COVID-19 or otherwise; the realization of property value appreciation and timing thereof; the inventory of residential real estate properties; the availability of residential properties for acquisition and the price at which such properties may be acquired; the ability of the Fund to benefit from any value-add program the Fund conducts at certain properties; the price at which the Fund's properties may be disposed and the timing thereof; closing and other transaction costs in connection with the acquisition and disposition of the Fund's properties; the availability of mortgage financing and current interest rates; the capital structure of the Fund; the extent of competition for residential properties; the growth in NOI generated from value-add initiatives; the population of residential real estate market participants; assumptions about the markets in which the Fund operates; expenditures and fees in connection with the maintenance, operation and administration of the Fund's properties; the ability of
About
The Fund is a "closed-end" fund formed under and governed by the laws of the Province of
For the Fund's complete audited consolidated financial statements and MD&A for the period from
Please visit us at www.starlightus.com and connect with us on LinkedIn at www.linkedin.com/company/starlight-investments-ltd-
Neither the
SOURCE
© Canada Newswire, source